5G has become a commonplace feature in many parts of India, particularly in urban cities and towns, with Jio leading the rollout in most locations and Airtel strategically choosing launch areas. Despite the 15 months that have passed since the introduction of 5G in the country, telecom operators have yet to discover effective monetization strategies. Users currently enjoy unlimited 5G access if they recharge with a denomination of Rs 239 or more, regardless of being on prepaid or postpaid plans.
However, offering free 5G may not be a sustainable long-term approach for the operators. While it accelerates adoption rates, it does not ensure additional revenues in the future. With higher tariffs for 5G not deemed feasible, a potential solution for telecom operators is to consider slowing down their 5G investments in the country. Analysts anticipate a slowdown in 5G investments from FY25, considering that most areas of India will likely be covered by 5G by then.
This strategic move is expected to enhance free cash flow (FCF) for telecom operators, particularly for Reliance Jio, heavily invested in deploying 5G standalone architecture. Both Jio and Airtel are projected to complete the majority of their 5G rollout by the end of FY24 (March 31, 2024).
In conclusion, it is likely that telecom operators will decelerate 5G investments in the short to medium term. The industry’s focus should shift towards identifying more meaningful use cases for 5G technology, benefiting both consumers and enterprises. This strategic shift is not anticipated to negatively impact smartphone OEMs, as the availability of free 5G is fostering fast adoption, encouraging users to switch to 5G-enabled phones, especially those priced above Rs 10,000. Until additional use cases for 5G emerge, the monetization of the network technology may be limited. However, telecom operators are exploring the option of leasing spectrum to enterprises for setting up 5G captive private networks as a means to generate additional revenue using the 5G spectrum they have invested significant amounts in.
